i never actually attempted to rectify this situation myself because i thought it would be such an easy fix and i never got around to...
either that or a software bug...
anyway, i finally had a look at it after i posted this and got smart playlists working perfectly...
i can't really explain what i did though... I'll try to explain.
all i did was go through each smart playlist and resort them. e.g from artist - song, and back again...
I then ctrl-click on the ipod and select 'update songs" and voila, all my smaart playlists are in the correct order and they get live updated! sweet... (this is my second ipod, first time i got it working)
i think for some reason, the smart playlists become 'stagnant' or something and refuse to update until to wake it up again... i don't really know! try it.